Inflation increased much faster than initially estimated last quarter, the Commerce Department said Thursday. A measure of inflation in the economy, the price index for gross domestic purchases, rose at a 3.6% rate last quarter, revised up 0.4 percentage point from the advance estimate.

The personal consumption expenditures (PCE) price index advanced at a 3.7% pace, revised up from the previously estimated 3.2% pace. Excluding food and energy, the PCE price index rose at a 4.3% rate, an upward revision of 0.4 percentage point. The PCE price indexes are the Fed's preferred inflation measures.

The revisions to prices were led by used and new motor vehicles, and fees for nonprofit hospital services. They also reflected revisions to the Labor Department's Bureau of Labor Statistics' consumer and producer price data published this month. The upgrades point to higher January PCE price index readings.

The GDP report also showed wages and salaries growth in the third quarter was much stronger than previously reported.

Wages and salaries are now estimated to have increased $303.0 billion in the July-September quarter, an upward revision of $115.2 billion. As a result, the economy grew at a 2.8% rate in the third quarter instead of the previously estimated 0.8% pace, when measured from the income side.